The “collaborative consumption” phenomenon. Signed up to Whipcar?

Just recently, we found out Whipcar, UK’s first peer-to-peer car sharing club was listed as a Community Car Club by CarPlus.org.uk. That probably means it passed a checklist of requirements, but with this piece of news, we can certainly offer users of Whipcar our annual Car Club Excess Insurance products.

Is there an excess on Whipcar vehicles (even though they are someone else’s)? The answer is yes. Drivers are liable to pay a £500 car hire insurance excess if damage occurs during any Whipcar booking. Whipcar offers Drivers the option to purchase a Damage Excess Waiver (DEW) for every hire. The excess waiver insurance costs £5 per day and reduces the Driver's financial liability from £500 to £250 in the unfortunate circumstance that a Whipcar Owner's car is damaged during hire. If you get into the habit of using this, would not you prefer an annual car hire insurance policy for £39.99 from iCarhireinsurance.com?

Let’s go back a bit…did you know what I meant by peer-to-peer? Have you ever heard of the term “collaborative consumption”? These business models and market places are everywhere: media, car rental, lodging, staffing, textbooks, apparel, custom graphic design and even finance. Netflix shares DVDs among a large subscriber base. Zipcar and Whipcar make car sharing easy. There are more.

Loosely defined, collaborative consumption is a business model in which shared goods or services are distributed via a market place to a community of users. Collaborative consumption gives people the benefits of ownership with reduced personal burden and cost and also lower environmental impact—and it is proving to be a compelling alternative to traditional forms of buying and ownership. It reshapes markets by changing supply and demand economics.

The ultimate beneficiaries of this competition and additional selection will be the consumer and the environment. While Zipcar's fleet-based car sharing model allows members to share a decentralized fleet of vehicles that are owned, insured and maintained by a single company, the peer-to-peer model championed by Whipcar allow private car owners to make their vehicle available for use by other drivers in their area in exchange for payment.

Peer-to-peer car sharing is seen as a natural extension of online file sharing and the person-to-person lending model (also known as P2P lending or social lending), and a further move towards collaborative consumption — see www.collaborativeconsumption.com — which is increasingly popular since the rise of social media.

Whipcar’s business model replaces Zipcar's fleet with a "virtual" fleet made up of vehicles from participating owners. Participating car owners make money by renting out their vehicle when they are not using it. Participating renters, meanwhile, can access nearby and affordable vehicles and pay only for the time they actually use them.

Car owners set their vehicle's location and availability schedule. With Whipcar, owners also set their hourly (and, at their option, daily and weekly) price, and have the ability to approve each renter. Soon, owners will be able to set separate pricing and availability for specific groups they define (e.g. just their friends and neighbours; or just a certain firm's employees). A final advantage is that the peer-to-peer model works in less densely populated areas where there might not be enough daily demand to meet Zipcar's high breakeven costs. So residents of suburban and even rural areas that could never support the level of activity required by Zipcar can now benefit from car sharing.

Like traditional car-sharing companies, the peer-to-peer firms screen participants (both owners and renters) for things like vehicle condition and driving history. Their websites bring the parties together, manage rental bookings and collect and distribute payment. Insurance during the rental period is covered by the peer-to-peer car sharing company’s insurance policy, thereby completely shielding the owner’s personal coverage.

As a result of their transformative nature, collaborative consumption market places are rising to pre-eminence. Rachel Botsman and Roo Rogers recently published What's Mine is Yours, a global survey of collaborative consumption efforts. I really enjoyed this book and I recommend it if you are into learning what is the next big social networking boom!